Interview: Simon Barnes
In what ways can manufacturers be encouraged to localise production and maintenance facilities?
SIMON BARNES: Domestic and international firms are aligning their strategies with the government’s vision and the needs of military customers to ensure that the work and capabilities developed in Saudi Arabia are transferred permanently, rather than just for the duration of a contract. This focus on localisation and capability development is part of the country’s plans to have 50% of its military procurement be local by 2030.
Human capital has emerged as a core factor driving progress in Saudi Arabia’s defence industry. A skilled workforce is essential, and creating a pipeline of talent with the right skills and mindset is crucial. Efforts to ensure that enough graduates with relevant backgrounds are available – and that degree structures and syllabuses are aligned with the needs of industry – are expected to propel the sector forwards. Creating an ecosystem in which individuals begin their careers in the defence industry, venture into other high-tech sectors, and return with enhanced knowledge and experience should further strengthen human capital. Consequently, industry players have invested in developing a skilled Saudi workforce in the defence industry, recognising that a reliance on expatriate employees is not a sustainable solution. To this end, BAE Systems Saudi Arabia has reached a Saudiisation level of around 80%.
How can local small and medium-sized enterprises (SMEs) and start-ups contribute more to the growth of Saudi Arabia’s defence and security sector?
BARNES: The Kingdom is rapidly developing as a regional centre in the defence industry. With its substantial spending and influence in the region, Saudi Arabia could become a global centre in the defence industry, opening up opportunities for collaboration between foreign companies and local SMEs. Foreign defence firms incubating and supporting domestic SMEs is crucial, as these organisations have invested in local businesses over the years, guiding their growth and divesting shares as they mature. They understand the characteristics of the defence and security sector, and aim to shelter SMEs from business-related issues.
Another crucial role foreign defence companies play is helping SMEs engage with end-users, as their position and close interactions with equipment users can provide valuable insights to SMEs on specific technologies, helping them align their work with the needs of the customer. Foreign defence companies are also able to leverage their global presence and networks to create linkages and provide scale to local SMEs. With operations spread across multiple countries and large workforces, they facilitate international connections and market opportunities for Saudi SMEs, bridging the gap to markets beyond the Kingdom.
What can be done to enhance research and development (R&D) in response to shifting dynamics?
BARNES: The establishment of the General Authority for Defence Development in September 2021 presents substantial opportunities for strategic decision-making, partnerships and investment in areas such as low-cost precision manufacturing, multi-use technologies and cybersecurity. This enables the country to determine which areas to focus its R&D efforts on and whether to produce or procure certain technologies.
The rapidly changing threat landscape requires a responsive approach, which can be achieved through partnerships with industry and direct engagement with customers. While Saudi Arabia may not have traditionally been associated with R&D, the perception is quickly shifting in areas such as low-cost precision manufacturing, multi-use technologies and cybersecurity, as well as the protection of critical national infrastructure. Saudi Arabia offers opportunities for foreign investment, especially in the field of cybersecurity. Collaborative partnerships help facilitate the exploration of technologies to be used for both civilian and military purposes.